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Question 1 a. Calculate the expected return on stock of Gamma Inc.: State of the economy...

Question 1

a.

Calculate the expected return on stock of Gamma Inc.:

State of the economy Probability of the states Percentage returns
Economic recession 28% -7.4%
Steady economic growth     35% 2.2%
Boom Please calculate it 14.6%


Round the answers to two decimal places in percentage form.

b.

Calculate the expected standard deviation on stock:

State of the economy Probability of the states Percentage returns
Economic recession              18% 2%
Steady economic growth 22% 8%
Boom Please calculate it 14%
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